Question

You are interested in selling your old car. A friend has offered to buy it for $3,500. You are satisfied with the deal because you would not be willing to pay more than $3,000 for it given its current condition. After reviewing the car market, you were sure no one would be willing to pay more than $3,200 for the car. What is the fair market value of the car?

Select answer from the options below
$3,250.
$3,500.
$3,000.
$3,200.

Answer 1

The fair market value of the car is typically defined as the highest amount that a prospective buyer is ready to offer and that a seller is willing to accept in an open and unregulated market. In this situation, you have established the following:

Your friend is prepared to purchase it for $3,500.

Your own assessment does not exceed $3,000 as a fair price.

You are confident that no one in the market would be ready to pay more than $3,200 for the car.

In this context, the fair market value is determined by selecting the highest amount from these considerations. Consequently, the fair market value is $3,500, which coincides with the sum your friend is prepared to pay. Therefore, the correct option is:

$3,500.